u/Fit-Bookkeeper8567

I guess we are in a government bond bear market. The last one was from 1941 until 1981.

If TIPS were invented, they would have worked in this period.

If there wasn’t an oil shortage that everyone needs dollars for, gold would work.

Commodities will work unless we hit a disinflationary recession.

Warsh wants to cut rates while reducing the balance sheet to manage the inflationary aspects of having cheap money. This is great for businesses. It is not as great for home loans as those are set off the long end of the curve.

If no one wants to buy what’s on the Fed’s balance sheet, we will have to oblige institutions to buy them. If we start yield curve control again, those institutions are going to take a bath on those bonds.

If the economy does keep growing, we will inflate away the national debt. This is what we did after WWII.

Considering we have a combination of blow out earnings, a war still effecting physical energy prices, a president who is very comfortable jawboning, and rampant deficit spending, what are people using for ballast in their portfolio?

I am using the following

VTIP-short term inflation protected treasuries

DHEIX-mostly short duration private and agency MBS

JAAA-AAA rated floating rate CLOs

CTAP- managed futures. Not a pure managed futures play as it is literally 22 percent long IVV

HGER- pure commodities play as an inflation hedge.

JEPI-I know it is all long equities, but it is low beta considering. it does great in chop. It recovers NAV faster than a long bond. It does underperform in a melt up. The monthly distribution does more work than the NAV.

Also a new Fed chair, with the old staying and a midterm year with mid-cycle redistricting.